Please, I beg you, at least stop talking about it
by digby
I don't have a problem with the Democrats calling for extension of the middle class tax cuts as an election ploy. It's good politics under the circumstances. But when I read this memo from David Plouffe to the congress I got that sick feeling again:
MEMORANDUM
THE WHITE HOUSE
August 3, 2012
MEMORANDUM FOR INTERESTED PARTIES
FROM: DAVID PLOUFFE
SENIOR ADVISOR TO THE PRESIDENT
SUBJECT: August Recess Messaging
The President and Democrats in Congress move into the August recess with clear momentum on the question of who to trust on taxes and, more broadly, whose economic agenda will benefit the middle class. Over the coming weeks, there is an opportunity to build on this momentum and shape the legislative agenda this fall by highlighting the choice Congress faces at this make-or-break moment for the middle class. Three points can clearly define the legislative choice throughout August:
—The President and Democrats in Congress are fighting to create an economy built on a strong and secure middle class, but Republicans in Washington are determined to return to the exact same top-down policies that led to the economic crisis.
—The plans proposed by the President and Democrats in Congress will keep taxes low for the middle class and create jobs by investing in education, clean energy, manufacturing, and small businesses. The President’s plan to reduce the deficit in a balanced way by $4 trillion asks the wealthy to pay their fair share and preserves the investments we need to grow the economy.
—Both parties agree that tax cuts for the middle class should be extended. We should extend those tax cuts now. Republicans in Congress are holding middle class tax relief hostage by insisting on more budget-busting tax cuts for the wealthiest.
Highlighting Wednesday night’s vote on middle class tax cuts in the U.S. House of Representatives lays out the choice clearly. With one vote, House Republicans could have joined Democrats in the Senate and sent a bill to the President’s desk to prevent a $2,200 tax increase on a typical family in a few short months. Instead, House Republicans blocked the bill because it did not cut taxes for millionaires and billionaires even further. Rather than giving 98% of Americans and nearly every small business a little more certainty, House Republicans again chose to prioritize cutting taxes by $1 trillion for the wealthiest few.
I think having an argument about taxes for the middle class makes sense. This economy remains a mess and average people don't need any more financial stress at the moment. But putting the deficit into the mix makes no sense. If 4 trillion remains the target, massive cuts are inevitable, even if the Democrats out-fox the Republicans and they end up allowing the Bush tax cuts for the rich to expire. This is approximately how much those taxes would raise:
If you tax only the rich, according to the New York Times analysis of the federal budget deficit (David Leonhardt's recent "Fix the Deficit Puzzle"), by allowing taxes to go up for households earning income above $250,000 a year, the take would be $54 billion in 2015 (or 13% of the projected $418 billion 2015 budget shortfall) or $115 billion in 2030 (or 9% of the projected $1,345 billion budget shortfall in 2030).
Keep in mind that the Clinton tax rates weren't exactly onerous by historical standards, and yet going back to them is the heaviest lift we can imagine. In fact, it's a tremendous long shot. And I think we know how tough cutting the defense budget is going to be, don't we? So, even if the Bush tax cuts for the rich are allowed to expire, what do you think will end up making the difference in that 4 trillion dollar promise?
The deficit projections are almost all a matter of rising health care costs, which the battle over the ACA shows is a political nightmare. It will be a miracle if the savings from the plan materialize. So, as long as they are focused on the deficit the safety net is in terrible danger, as are many other necessary government functions. And in a time of lagging growth, financial insecurity for the middle class and global economic drag, that's insane.
Obviously if Romney wins, they'll slash the hell out of everything and that will be that. I'd guess they'll re-discover the joys of stimulus in the form of more tax cuts so we'd better enjoy the $11.26 most of us will get. Unfortunately, if Obama wins I'm not sure we'll be a whole lot better off unless they can all agree to prioritize jobs and growth and table the deficit nonsense at least until the economy is really growing and unemployment is way down. It's hard to see that happening.
So, we've probably got some form of austerity coming, no matter what, unless some faction in the congress is willing to obstruct it. I've been counting on the tea partiers to be idiots and I still think that's our best bet. But maybe a group of Democrats will throw themselves in front of the bus and just say no to cuts.
Sadly, unlike the Republicans, they will be in mortal danger of losing their jobs if they do it. Democrats shun people who aren't "reasonable" and since the reasonable grown-up President is still defining 4 trillion dollars as the deficit cutting target and is also selling the fiscal cliff mythology, these Democrats would be brutally dealt with by the press, the Party and probably the voters if they obstruct a deal. They will be seen as delusional lefties who refuse to face the reality that "entitlements" and other government functions must be sacrificed for the greater good. After all, everyone agrees that all the Republicans have to do is agree to some nominal "revenue" and it's all good right?
This is where I think rhetoric plays a big part. Nobody's making any argument against cutting spending. The need for a big deficit reduction plan is an article of faith and the question is only if they can get Grover Norquist to sign off on raising some phony tip money from millionaires or if they can out-maneuver the Republicans on the Bush tax cuts and raise some money that way. So, if a faction of progressives were to obstruct any deficit reduction bill that incorporates the stated goal of raising taxes "a little bit" on millionaires, it would be greeted with stunned disbelief. After all, that's what has been touted as the big victory for the Democrats.
If the Party, including the President, would drop all this "balanced approach" hoohah and ran solely on the idea that we need jobs and growth and that worrying about deficit reduction right now is like selling your car to pay for your new couch while your house is burning down, some Democrats might be able to block a new Simpson-Bowles-PetePeterson-Grand Bargain extravaganza. At least people would understand that they are not doing it out of unreasoning petulance. But that's not happening so we are stuck hoping against hope that Grover Norquist still has enough juice to blow up this deal one more time. I don't know if he does.
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